HOUSEHOLDS will benefit from cheaper water services in 2015, after an agreement to cut bills by about five per cent was announced.

Ofwat, the Water Services Regulation Authority, finalised the deal which will see the average annual cost fall by £20 from £396 to £376.

Jonson Cox, chairman of Ofwat said: “This is an important step in maintaining customers’ trust and confidence in the water sector.

“We set out to deliver a challenging but fair outcome.

“We are requiring companies to meet higher service standards and deliver on their promises to customers. We are bringing down bills so customers can expect value for money while investors can earn a fair return.

“Companies will need to stretch themselves to deliver much more with the same level of funding as in previous years. We will achieve more resilient infrastructure and better service as a result.”

Cathryn Ross, chief executive of Ofwat, added: “With bills held down by five per cent and service driven up over the next five years, customers will get more and pay less.

“Where companies stepped up to do the best they could for their customers we did not need to intervene. But where companies fell short we stepped in to make sure customers get a good deal.

“Now the hard work begins. Companies will only build trust and confidence with their customers if they deliver. Those who do can look forward to fair returns while those that don’t will be hit in the pocket and face a tough five years ahead.”

New charges will come into effect in April. Water companies have two months in which to accept Ofwat’s final determination or seek a referral to the competition and markets authority.

Ofwat has promised that, despite reduced bills, services will improve including saving 370 million litres of water a day tackling leakages, reducing supply interruptions and ensuring cleaner water at more than 50 beaches.